Telecom 2012: a year to remember

Once upon a time Lebanon was crowned king innovator in telecoms! We were the 1st in the region to have fixed phone lines; the 1st generation mobile service known as “AMPs”; and the 1st to have GSM in the mid-90s; and then we entered the dark “telecom coma” era! For one reason or many, Lebanon stepped off the global technology train for only – a couple of decades!

Since I entered the telecoms sector in 99, I have witnessed Lebanon’s descent from leadership to apathy. But this year stands out as noteworthy. Led by the extraordinary energy of one man, Nicolas Sehnaoui, this ailing sector has experienced a significant number of positive changes. Lebanon’s stagnated telecom sector has woken up, made investments, adopted advanced technologies and launched new services.

Yet still, Lebanon lags behind our Arab peers in terms of competition, Internet speeds and other telecom services. This is understandable. In telecoms, one cannot expect a magical shift in a short, one-year period.

In this paper I highlight the segments and initiatives of importance outlining their impact on consumers and businesses alike.

International and Local Connectivity:
In October 2011, the international capacity, known as E1s (2 mbps connection), dropped in price from $2700 to $420. Given its cost of $30, this leaves room for further drops within the $50 range. Lebanon has abundant capacity on two fiber optic cables. Price economies of scale need to be implemented so ISPs are encouraged to buy more capacity and differentiate their services. Licensing new upgrades takes months rather than days if bandwidth-on-demand gets implemented. We say a new round of price drops is due, faster bandwidth upgrades is needed to satisfy the consumer’s need for speed.

Redundancy on the international capacity was established in July 2012, after Lebanon suffered the infamous 72-hour outage after a cut in IMEWE (our main fiber optic cable). This redundancy was achieved after enormous effort by the Minister and his team of advisors, who traveled to Cyprus and ensured that a redundancy agreement with Cyta was signed off. However, this redundancy is still “manual” as engineers have to intervene to make changes every time a cable is cut off. This shortcoming is whose fault: Ogero or Ministry? Consumers don’t care – all they want is a service without interruptions. Lebanon should be multi-linked with automatic redundancies so that consumers and businesses don’t suffer interruptions.

The national fiber optic plan is on its way as just last week the Ministry activated the first 26 nodes within Beirut. The Ministry expects to connect all CO’s (central), ISPs, DSPs, and two mobile operators by 2013. The open network philosophy will increase services and competition and allow for more consumer choice.

Average Internet Speed:
The average Internet speed per connection in Lebanon now stands at 2.3 Mbps. This has increased 4.5 times over, as Lebanon leapfrogged from 186th to 150thposition in just one year (http://www.netindex.com/download/allcountries). Yet other countries have taken action too – for example Japan grew its average Internet speeds by 18 Mbps to 37 Mbps – jumping from 13th to 2ndplace in 1 year.

While it is impressive that Lebanon outgrew 35 countries in only one year, we must focus on long term strategies to continually improve our internet speeds. We need to instate competition in international fiber optic services; by that, we free up the price setting mechanisms to become determined by supply and demand, rather than by Governmental Decrees which sometimes, if approved, take months. After all, consumers want faster connections, faster… and we can get there faster!

DSL:
As the Ministry dropped the DSL prices, caught up with its competitor’s ISPs, and offered free unlimited night service, the DSL subscribers increased by 20% to reach 240,000 households and companies, representing a 28% penetration rate. However, the Ministry still remains the undisputed leader in this sector, controlling 80% market share, and offering service through 170 COs while ISPs cover only 70 COs! Several ISPs are not even granted the right to enter this sector at all! All providers should have equal treatment so that consumers in all areas benefit from ISP’s competitive packages. More needs to be done!

Mobile, 3G and Tablets:
With major investment focused upon the mobile sector in 2011 and 2012, alongside the introduction of new packages and plans, the mobile sector witnessed fast growth. In particular, 3G services witnessed stellar growth, with subscriptions now exceeding 1.2 million. However, 3G speeds still remain slower and more expensive than in other countries. We predict this is only temporary and will get better as prices of international lines drop, mobile operators add more base stations, and their sites get connected with fiber optics.

On another front, the Ministry is opening up the 3G market by allowing established ISPs to offer 3G services at competitive prices. This move increases competition, adding variety of operators and services for consumers to choose from. So come January 2013, consumers will have multiple choices for 3G internet services: alfa, touch or Mobi among others. Summed up: Excellent work!

The program of getting a tablet with 3G connection in the hand of each student is memorable if not admirable. Not only does it invigorate knowledge and opens up student’s horizons, it adds jobs and opens up opportunities to potential export of technology in the future. Did I mention these tablets will be locally assembled? Thumbs up!

Licenses:
The licensing of ISPs and DSPs moved back from the Telecom Regulator to the Ministry; however, licenses remain renewed on a yearly basis for the 10th year! This limits the potential of the data and internet providers, the entrepreneurs’ ability to innovate, create jobs and invest in new technologies, all of which limit the creation of innovative services, the competition and negatively affect the consumer’s experience.

Conclusion:
Cabinets resign, new ministers get appointed, and even if we prayed for it, Sehnaoui’s tenure will not last forever. And if, God forbid, the next telecom minister happens to lack the same ambition, energy, enthusiasm, visionary thinking, and extensive telecom knowledge, the sector will dwindle back to a slow moving, sclerotic, technologically-phobic machine that is plagued by the anti-consumer monopolistic practices of large operators.

Short term achievements are great yet; they are short lived and little remembered! Lebanon is in dire need for a sustainable long term telecom strategy built on foundations that promote investments, increase innovation, set healthy competition, all of which fall in the best interest of the Lebanese consumer.

The leader who is capable of translating these foundations into advanced Laws or Telecom Policies, or sets the right General Rules for the Regulation of Telecommunication Services will be the a true Statesman who’s endeavors’ will last forever,… he who does that will have drawn up the blueprint that all other ministers, regulators, operators and governmental entities will follow to ensure the continual introduction of the latest technologies and services, and spark many other opportunities that directly benefit the consumer and businesses.

This will insure the sustainable evolution of telecom services and places Lebanon on top of its peers. This will simply insure that consumers are happily satisfied for years to come with their advanced and affordable telecom services. We look forward to Sehnaoui culminating his achievements by setting ambitious Rules, and becoming “the Statesman who reformed the sector”!